Fluidity Money is a blockchain incentive layer that rewards users for swapping, trading or transacting assets. That is, if you send, receive or swap with a fluid-wrapped asset, you stand a chance to earn randomly paid yields and “large dividends,” which can range from cents to millions. This is the polar opposite of traditional methods, where you have to lend, stake or lock up your assets in an idle form for an extended period of time to earn yields. Fluidity, on the other hand, envisages you, as a user, earning rewards through everyday activities like payments for food, rent, or interactions with your favorite decentralized exchange (DEX) or NFT marketplace, or blockchain gaming platform. At least 50-70% of all transactions will be yield-bearing, and the rewards are split 80:20 between senders and receivers. There is no cost of entry and zero risk of loss.
Fluidity is now on mainnet, and can be accessed here.
How Fluidity works
The user can choose either Ethereum or Solana network, and deposit stablecoins like USDC, USDT, DAI, or UXD to get fluid-wrapped assets.
Fluidity is robust and specially designed not to devolve into a Ponzi scheme dependent on future growth, or new users coming in. The collateral in Fluidity is transferred to a lending protocol. The yield accrued is then moved to a reward pool, and disbursed randomly upon the use of fluid assets with the help of our novel Transfer Reward Function (TRF). The system is fully collateralized, and the fluid assets can be redeemed for the underlying principal at any given point in time.
Fluidity is frictionless, reinforcing existing behaviors. Millions trade crypto every single day. Opportunity cost is key here, and that is exactly where Fluidity comes into play. Apart from the gas fees of the chain that is being used, zero charges are levied on the user. That is, users, stand a chance to win potentially life-changing sums of money with minimal deviation from their daily habits.
For a model like Fluidity, the biggest attack threat would be malicious actors spamming the system with small transactions to maximize yield potential. We have devised an elegant solution to combat this possibility. With the help of TRF, Fluidity makes sure that spammers always pay more in gas fees [on the specific chain] than any reward they could receive. More details about the Optimistic Solution can be found here.
Fluidity is a sustainable yield model: The current, most predominant, DeFi yield model is liquidity mining—one that is highly unsustainable in the long run. When the high APYs normalize over time, mercenary capital will flee; hence, no stickiness can be achieved. That is where Fluidity’s Utility Mining comes into play, with an aim to incentivize genuine users to explore different aspects of the protocol. In simple terms, Utility Mining rewards users for displaying ‘intended behaviors’, gifting them with governance tokens on top of the general TRF rewards. Take an example. If a DEX like Uniswap signs up for Utility Mining, a user who performs a specified transaction with a fUSDC pair on Uniswap could win up to three yields—Fluidity governance tokens, UNI tokens, and the usual TRF rewards. Learn more about Utility Mining here.
This motto was the guiding light of early blockchain development and the concept of decentralization as a whole. In liquidity mining, whales and high-capital users can corner the lion’s share of a protocol’s governance tokens and yield opportunities. With Utility Mining, the process is much fairer. Users are awarded the native tokens for displaying intended behaviors; the magnitude of your transactions with fluid assets doesn’t matter, the probability of reward remains the same.
Fluidity incentivizes positive-sum competition to ensure sustained growth. With Utility Mining, protocols can advertise a higher yield, and, by extension, attract the highest user attention. To control Utility Mining emissions, utility gauges are in place—Fluidity DAO users and whitelisted protocols can vote on which protocol can receive the highest emissions. Think Curve Wars (fight for the flow of liquidity in DeFi), and extrapolate it to a multi-layered competition to control the flow of users—the second-order effect of which will be a flow of liquidity. On a high level, Fluidity is an incentive layer that gives protocols a chance to bid for the attention of users who are highly engaged and aligned with the overall vision of the protocol. You can read more about Fluidity governance and Fluidity Wars here.
The evolution of Fluidity
The core principle is based around changing people’s perception of money, and the relationship between money and value transfer, says co-founder Shahmeer Chaudhry. “Our goal, long term, is to re-shape how people think about spending,” Shahmeer said.
The fundamental goal of Fluidity is the gamification of finance. “One thing I noticed was that DeFi lacked processes to make it fun and interesting. In 2017-18, everybody said DeFi could be the use case that would bring in a billion users to crypto, but it actually turned out to be NFTs and GameFi. At Fluidity, we want to gamify how people think about spending money,” Shahmeer said.
Fluidity has been on Solana devnet beta since February 12. Around 50,000 users have already transacted and swapped in the beta version, which is a very good stress test for the system to ensure robustness ahead of mainnet launch scheduled for Q3 of 2022. The protocol has received seed funding to the tune of $1.3 million from Multicoin Capital, Solana, MakerDAO and Circle.
The protocol is currently focused on onboarding existing crypto users, DEXs and NFT marketplaces, before making the move onto retail. “Our best product-market fit (PMF) [currently] is the existing crypto user base,” said Shahmeer. “They will be better able to understand and use the protocol. The idea is to start with different DEXs like Uniswap, Saber and Serum. The simple point is that people trade hundreds of millions of crypto every day. The plan is to move to NFT marketplaces, which have the highest crypto volumes; every time a user buys or trades NFTs, why not maximize chances of earning a lot of money without extra charges,” he said.
Fluidity is frictionless, reinforcing existing behaviors. Millions trade crypto every single day. Opportunity cost is key here, and that is exactly where Fluidity comes into play. Apart from the gas fees of the chain that is being used, zero charges are levied on the user. That is, users stand a chance to win potentially life-changing sums of money with minimal deviation from their daily habits.
On a larger scale, when the assets are constantly moved around, it also becomes way more resilient against speculation—a stabilizing factor sorely missed in the recent cascade of market downturns. Fluidity Money, the brand new no-loss yield primitive on Solana, is move-to-earn for DeFi, redefined; you should not be sedentary, neither should your money.
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